Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: marc chatman who wrote (19782)	4/20/1998 11:17:00 PM
From: Challo Jeregy	Read Replies (2) \| Respond to of 95453

Mark, re: candlesticks. Being the novice that I am, I would say that your interpretations are correct with near perfect textbook pictures. And I suppose that two, three days in this sector could be construed as a "run-up". But what do I know? FWIW, FGII doesn't look like that at all!!<VBG> It shows a morning star occurring last Friday, with a bullish long white (empty) line today. Of course, tomorrow could be the end of the "run-up", who knows?

To: marc chatman who wrote (19782)	4/21/1998 12:21:00 AM
From: chuck weir	Respond to of 95453

Does anyone here read candlesticks? Ok, some text stuff to help clarify thinking is below. A note of interest on VRC, 10 of the more popular tech indicators are at the upper end of their trading range (pre-sell signals) and a hanging man candle (reversal pattern) was just fired off; usually this means the beginning of a down move. The text stuff: Hammer and Hanging Man (kanazuchiltonkachi and kubitsuri) Confirmation is definitely required. Reversal Candle Patterns The Hammer and Hanging Man are each made of single candlestick lines (Figures 3-1 and 3-2). They have long lower shadows and small real bodies that are at or very near the top of their daily trading range. These were first introduced as paper umbrellas in Chapter 2. They are also special versions of the Tonbo/Takuri lines. The Hammer occurs in a downtrend and is so named because it is hammering out a bottom. The Japanese word for Hammer (tonkachi) also means the ground or the soil. A Hanging Man occurs at the top of a trend or during an uptrend. The name Hanging Man (kubitsuri) is derived from the fact that this line looks like a hanging man with dangling legs. Another candle line similar to the Hammer is the Takuri (pronounced line. This Japanese word equates with climbing a rope or hauling The motion is not smooth and could be related to pulling up an anchor your hands: as you change hands, the upward movement is interrupted momentarily. A Takuri line has a lower shadow at least three times length of the body, whereas the lower shadow of a Hammer is a only twice the length of the body. Rules of Recognition 1 The small real body is at the upper end of the trading range. 2. The color of the body is not important. 3. A long lower shadow should be much longer than the length of the real body, usually two to three times. 4. There should be no upper shadow, or if there is, it should be very small. Scenarios and Psychology Behind the Pattern Hammer The market has been in a downtrend, so there is an air of bearishness. The market opens and then sells off sharply. However, the sell-off is abated and the market returns to, or near, its high for the day. The failure of the market to continue the selling reduces the bearish sentiment, and most traders will be uneasy with any bearish positions they might have. If the close is above the open, causing a white body, the situation is even better for the bulls. Confirmation would be a higher open with yet a still higher close on the next trading day. Hanging Man For the Hanging Man, the market is considered bullish because of the uptrend. When the Hanging Man appears, the market opens at or near the highs, sells off, and then rallies to close at or near the highs. This is what causes the long lower shadow which shows how the market just might begin a sell-off. However, it is not the typical price action that would make you believe that the Hanging Man has called a reversal. If the market opens lower the next day, those who bought at the open or close of the Hanging Man day are now hanging onto a loss. Bearish confirmation could come from the body's being black and/or a large down gap the next day with a lower close. Pattern Flexibility Features that will enhance the signal of a Hammer or Hanging Man pattern are an extra long lower shadow, no upper shadow, very small real body (almost Doji), the preceding sharp trend and a body color that reflects the opposite sentiment (previous trend). This trait, when used on the Hammer, will change its name to a Takuri line. Takuri lines are, generally, more bullish than Hammers. If a Hammer has a white body, it means the sell-off reversed and prices closed at or near the high. This would make the Hammer even more bullish. If a Hanging Man has a black body, it shows that the close could not even get back to the opening price level. This would make it more bearish. As with most single candlestick patterns like the Hammer and the Hanging Man, it is important to wait for confirmation. This confirmation may merely be the action on the open of the next day. Many times, though, it is best to wait for a confirming close on the following day. That is, if a Hammer is shown, the following day should close even higher before bullish positions are taken. The lower shadow should be, at a minimum, twice as long as tr but not more than three times. The upper shadow should be no more than 5 to 10 percent of the high-low range. The low of the body sh below the trend for a Hammer and above the trend for a Hanging Reversal Candle Patterns Pattern Breakdown The Hammer and Hanging Man patterns, being single candle lines, cannot be reduced further. See Paper Umbrella in Chapter 2. Related Patterns The Hammer and Hanging Man are special cases of the Dragonfly Doji discussed in the previous chapter. In most instances, the Dragonfly Doji would be more bearish than the Hanging Man.